Western Europe is New Top International Market for U.S. Companies
Conducting Global Business

Wells Fargo 2016 International Business Indicator finds slightly
higher optimism among U.S. companies doing business abroad

April 25, 2016 01:30 PM Eastern Daylight Time

LONDON--(BUSINESS WIRE)--Despite a mild ongoing economic recovery, Western Europe is now the most
important international market for U.S. companies doing business
globally, according to the latest Wells
Fargo International Business Indicator. Surpassing China as the
Indicator’s most-mentioned market, Western Europe moved from No. 4 in
2015 to this year’s top spot, with 33 percent of respondents citing it
as a key market. With Canada and Mexico falling from the top three,
China followed Western Europe with 23 percent, as Asia Pacific,
excluding China and Japan (20 percent), and Latin America, excluding
Mexico (15 percent), round out the top four.

“Many survey respondents cited the strong U.S. dollar, in comparison to
other markets, and Western Europe’s improving economic conditions when
mentioning the region as the most important global market,” said Mike
Schmittlein, head of Wells Fargo’s Global
Banking Group in Europe. “As U.S. companies expand internationally,
Western Europe has become an increasingly important market for their
future growth. We continue to see more U.S. companies doing business
throughout the region and expect that trend to continue.”

Released today by the International
Group of Wells
Fargo & Company (NYSE: WFC), the 2016 International Business
Indicator1 registered a positive score of 65, up modestly
from 63 in 2015. The Indicator tracks the strength and direction of the
international outlook of U.S. companies, surveying more than 260 U.S.
companies with annual revenue of $50 million or more that conduct at
least some international business.

For the second consecutive year, as companies look ahead two-to-three
years, China remains the top “hot spot” for longer-term future growth,
followed by Mexico and Brazil. Citing its still-growing market and large
population, 42 percent of U.S. companies surveyed say China is important
to their business success today and/or in the future. However, the
region does present a challenge in the short term, with 65 percent of
executives reporting that China’s economic slowdown has affected their
companies’ international business activities.

Additional Indicator Findings

Despite concerns about exchange rates and global economic conditions, a
majority of U.S. companies expect an increase in non - U.S. revenue over
the next 12 months as they continue to pursue business opportunities in
international markets. Recognizing the ongoing value in doing business
globally, 47 percent of U.S. companies expect profits from international
business activity to increase this year, compared to 39 percent in 2015.
Additionally, 87 percent of U.S. companies agree that international
expansion is needed for long-term growth, with emerging markets
providing the greatest opportunities (69 percent).

“The latest indicator results show that, even with global volatility,
U.S. companies remain optimistic about international growth
opportunities,” said Richard Yorke, head of Wells Fargo International
Group. “While some U.S. companies may be reevaluating certain factors of
their international strategy – such as timing and specific markets –
they are not retreating from pursuing global business opportunities as a
core part of their business strategy.”

U.S. companies continue to invest in global marketplace

The survey found that U.S. companies remain confident about the future
of the global marketplace. Six in 10 companies expect their
international business activity to increase, while 54 percent believe
the international component of their business will become more important
in the next 12 months. Nearly half (44 percent) expect to increase the
amount of products/resources they source from outside the U.S., up from
31 percent in 2015. Planning for international growth remains a priority
for most U.S. companies, as 63 percent say they expect to increase
long-term international business development planning in 2016.

The U.S. Factor

Indicating a dampened outlook for the U.S. business market, less than
half (48 percent) of survey respondents expect the U.S. market to
improve over the next 12 months, down from 64 percent in 2015. Concerned
about growth prospects in the U.S., more than a third (36 percent)
expects economic conditions in the U.S. to negatively impact their
international business plans, up from 24 percent in 2015. At the same
time, a majority of companies agree that low interest rates (66 percent)
and depressed energy prices (61 percent) have benefitted their business.

Issues impacting international business decisions

According to the Indicator, corporate taxes and the Trans-Pacific
Partnership (TPP) agreement are two issues important to U.S. companies.
Six in 10 executives say corporate taxes play a significant role in
their companies’ international business decisions. While 56 percent of
survey respondents say the TPP will open new opportunities for their
companies in the Pacific Rim, 19 percent state it is too early to tell
whether it will have a positive or negative impact.

When assessing international markets, U.S. companies indicated several
key factors that are likely to have a negative impact on their
international business plans, including political stability outside of
the U.S. (59 percent), currency fluctuations or exchange rates (51
percent), and general economic conditions outside the U.S. (51 percent).

On behalf of Wells Fargo, global research firm GfK conducted 262
telephone interviews between December 15, 2015 and February 5, 2016 with
executives at U.S. companies with $50 million or more in annual revenue
that conduct business internationally. Additionally, participants had to
be associate vice president/director level or above, with either direct
decision-making or some influence over the company’s international
business plans and/or strategies. The margin of error on the total is
+/-7.3 percentage points at the 95% confidence level.

Wells Fargo & Company (NYSE: WFC) is a diversified, community-based
financial services company with $1.8 trillion in assets. Founded in 1852
and headquartered in San Francisco, Wells Fargo provides banking,
insurance, investments, mortgage, and consumer and commercial finance
through 8,800 locations, 13,000 ATMs, the internet (wellsfargo.com) and
mobile banking, and has offices in 36 countries to support customers who
conduct business in the global economy. With approximately 269,000 team
members, Wells Fargo serves one in three households in the United
States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2015
rankings of America’s largest corporations. Wells Fargo’s vision is to
satisfy our customers’ financial needs and help them succeed
financially. Wells Fargo perspectives are also available at Wells
Fargo Blogs and Wells
Fargo Stories.

About GfK

GfK is one of the world’s largest research companies, with more than
13,000 experts working to discover new insights into the way people
live, think and shop, in over 100 markets, every day. GfK is constantly
innovating and using the latest technologies and the smartest
methodologies to give its clients the clearest understanding of the most
important people in the world: their customers. In 2014, GfK’s sales
amounted to €1.45 billion. To find out more, visit www.gfk.com.

1The Indicator score represents the average of responses
for two questions regarding the level of importance and activity that
U.S. companies expect from their international business in the next 12
months. The Indicator score ranges from zero to 100, where 100 indicates
an absolute positive outlook, 50 indicates a neutral outlook, and zero
indicates an absolute negative outlook.